Sees increase in broadband connectivity triggering domestic demand in 2012

The who's who of the semiconductor industry will gather in Hyderabad in the second week of New Year to discuss the most promising area for the industry in the coming decade. The theme of the five-day conference is embedded solutions for emerging markets.

This captures the mood of Indian semiconductor industry that is attempting to create an ecosystem.

Despite being a centre of excellence in design, the much-promised and touted “fab industry” has failed to evolve. The industry sees steps in right direction to create a fab industry in the proposed National Policy of Electronics.

The Indian Semiconductor Association (ISA) feels that the policy would help create a globally competitive electronics system design and manufacturing (ESDM) industry.

“We welcome the draft policy and extend our support to achieve the projected turnover of around $ 400 billion by 2020. It promises to generate 2.8 crore jobs by 2020. It also proposes to set up over 200 Electronic Manufacturing clusters,” Mr PVG Menon, President of India Semiconductor Association (ISA), says.

Assocham and Frost & Sullivan too have pegged the domestic demand at $400 billion by 2020.

For long, the industry has complained about poor quality or short supply of human resources for very high-end design needs. It remained by and large a far cry.

As it is, the country emerged a top global location for research and development.

That MNCs increased workforce to 1.80 lakh in 2009 from 16,000 in 2000 shows the confidence in Indian expertise. The number grew at a compounded annual growth rate of 31 per cent and targeted to reach 3.19 lakh by 2015.

“We are quite hopeful that the proposed policy would go a long way in addressing this issue. It aims to significantly upscale high-end human resource creation by adding 2,500 Ph.Ds annually by 2020,” Mr Menon points out.

Though the global recessionary trends remain a major worry, the industry expects boost in domestic demand following the Union Government decision to connect 2.5 lakh villages with broadband in 2012. Roll out of the National Knowledge Network Project, would also be crucial for the industry in 2012. “We also expect segments like consumer, industrial and medical to grow significantly this year,” Mr Menon said.

This will lead to consumption of digital devices in rural and semi-urban areas, triggering demand for hard ware components. Industry players expect preferential access in the case of government procurement of made-in India components.

Notwithstanding a weak global economic environment this year and natural disasters that impacted production in Asia, the semiconductor industry has continued to grow in 2011. The growth has been driven by the domestic electronic product consumers.

Globally, the semiconductor companies weathered the myriad challenges of fluctuating economies and natural disasters to maintain the growth from 2010 and for the first time ever it crossed the $300 billion mark in revenues, Mr Jaswinder Ahuja, Corporate Vice-President and Managing Director of Cadence Design Systems (India), said.

In India, the global variables had minimal impact and according to the report from ISA Frost and Sullivan India Market Update, the semiconductor market grew an impressive 28.3 per cent over 2010, driven primarily by mobile devices, telecommunications and IT sectors.

The report also forecasts that by 2012 the revenues will be in the region of $9.86 billion in the country.

“2012 will be characterised by opportunities and challenges. In the India context, the National Policy on Electronics will have impact across the board and present several new opportunities,” he said.

Globally the trends around mobility and application-driven design continue to provide tremendous opportunity but will also challenge the designers to come up with new ways to deliver ever increasing functionality and performance on very tight schedules while reducing cost.

“The proposed national policy has the potential to be a game changer for the country with far-reaching consequences for all of us. The policy aims to address the huge gap between locally produced electronics and the domestic demand for electronics in India,” Mr Ahuja felt.

(This article was published on December 30, 2011)
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